Sec. 1981 claim not barred by fact that California state employment governed by statute, not contract

Addressing an issue of first impression, the Ninth Circuit concluded that Section 1981 discrimination claims by Latino police officers were not barred simply because the employment relationship between California and its civil employees is governed by statute, and not contract. California case law supported a broader view of the applicability of Section 1981 to its public employees and to hold otherwise would run counter to the important federal interest in prohibiting race discrimination in contracts. The appeals court also found that the evidence supported the award of over $6 million against the city and four police chiefs individually, though the judgment against one chief was vacated and remanded because that police chief was deceased and the lower court had to determine whether his estate could be substituted as a defendant (Flores v. City of Westminster, October11, 2017, Farris, J.).

Three police officers of Latino descent sued the City of Westminster and four current and former police chiefs, alleging discrimination based on race and national origin, as well as retaliation in violation of the California Fair Employment and Housing Act (FEHA) and 42 U.S.C. § 1981.

First plaintiff called names, denied assignments. The first officer joined the department in 2002, after having served ten years in another city. In 2004 and 2005, he applied to be a detective in the fraud unit but was rejected. Over the next few years he applied for and was denied other special assignments, all of which he believed were awarded to less experienced officers. In 12 years, the only special assignment he received was a mall assignment. He also claimed he was called derogatory names by other officers, including “Dirty Sanchez,” “Jorge,” and “Silverback,” and he was told that the gray streak in his hair was his “INS mark.” He filed discrimination charges with the Department of Fair Employment and Housing (DFEH). Thereafter, he allegedly experienced retaliation, including being removed from the list of available field training officers (FTO) to mentor new recruits and being subjected to unwarranted discipline.

“Rookie of the Year” denied special assignments too.The second officer joined the city in 1998 after graduating from the top of his police academy class. Despite being named “Rookie of the Year” and performing duties as an FTO and on the SWAT team, he was rejected 14 times for special assignments between 2002 and 2007, some of which went to more junior white officers. As with the first plaintiff, the only special assignment he was given was the mall. He filed a DFEH charge in 2010 and also allegedly experienced retaliation, including written reprimands and an internal affairs investigation for untimely booking of a pen into evidence even though, during the delay, he was testifying in federal court on an unrelated work matter.

Third plaintiff, same story. The third officer, an officer in the U.S. Marine Corps Reserve, was hired in 2004 and he performed duties as an FTO and on SWAT. He also served on the Honor Guard. Between 2004 and 2014, he was denied 12 special assignments, four of which went to less qualified white officers. At one point he was threatened with discharge when the then-chief believed he lied while testifying about another officer’s use of force. The other officer was cleared but the charge that the plaintiff lied stayed in his file with a finding of “not sustained” rather than full exoneration. Also, the chief removed his SWAT and Honor Guard duties.

Officers win over $6.5 million. After reviewing the evidence, the jury largely sided with the officers, finding that: 1) the city retaliated against the first officer in violation of FEHA; 2) that two chiefs racially discriminated against all three officers in violation of Section 1981; and 3) that three chiefs retaliated against the first plaintiff and two retaliated against the second plaintiff in violation of Section 1981. The jury awarded a total of $3,341,000 in general and punitive damages, and the court awarded $3,285,673 in attorneys’ fees. The city and the chiefs appealed.

First officer proved retaliation. Affirming in part, the Ninth Circuit first held that the district court properly denied the city’s motion for a new trial on the first officer’s FEHA retaliation claim. Though the city argued that he was not subjected to adverse actions, the court disagreed because actions that are “reasonably likely to impair” an employee’s performance or “prospects for advancement or promotion” qualified under FEHA. Here, after filing his DFEH complaint, the officer was removed from the FTO list, received negative log entries, and received his first written reprimand. A jury could reasonably infer that this would impact his performance and his chances for special assignments or promotions.

Also rejected was the city’s argument that this officer received a double recovery because the $150,000 awarded for the city’s retaliation under FEHA overlapped with the damages awarded for the three chiefs’ retaliatory actions under Section 1981. As the district court noted and the appeals court agreed: “The jury heard a wide range of evidence spanning many years, including conduct by many different employees of the Police Department. The Court is aware of no reason that the jury could not have identified conduct rendering the City liable [for retaliation in violation of FEHA] but not constituting personal participation or ratification by a Chief.”

California statute did not bar Section 1981 claim. Next addressing an issue of first impression, the Ninth Circuit rejected the police chiefs’ argument that the plaintiffs could not recover under Section 1981 because the employment relationship between California and its civil employees is governed by statute, not contract. Applying a three-step process used by the Supreme Court with respect to Section 1988 claims, the appeals court concluded that: (1) because no federal rule existed on this, it should (2) consider the application of state common law as modified by the state’s constitution and statutes, and (3) consider whether federal interests predominate.

Here, the case relied on by the chiefs predated the 1991 amendments to Section 1981, which expanded the reach of the statute’s “make and enforce contrast” term. It also analyzed Washington, rather than California law. Also, the California Supreme Court in 2003 declared that “a long line of California cases establishes that with regard to at least certain terms or conditions of employment that are created by statute, an employee who performs services while such a statutory provision is in effect obtains a right, protected by the contract clause, to require the public employer to comply with the prescribed condition.”This indicated a broader view of Section 1981’s applicability to public employees, under California law, than the defense argued.

Assessing the predominance of federal interests also led the appeals court to conclude that the plaintiffs’ Section 1981 claims were proper because reading state law to bar such claims would hinder the preeminent federal interest in preventing race discrimination in the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.

Evidentiary challenges rejected. The appeals court next rejected the chiefs’ arguments that the lower court erred by allowing evidence of: events that happened outside the limitations period; racial slurs in the department; unprofessional emails to women; and a prior discrimination claim involving a “Whites Only” sign in the police station. This evidence was relevant to the plaintiffs’ claims that they were discriminated against under a custom or policy of the department.

Chiefs individually liable. There was also no abuse of discretion, held the appeals court, in finding the chiefs liable in their individual capacities. The jury heard evidence from which it could reasonably find that the chiefs discriminated or retaliated against the plaintiffs with malice. For example, one chief oversaw multiple internal affairs investigations against one plaintiff and disciplined him for conduct that did not result in discipline of another officer who did the same thing.

Punitive damages. Furthermore, the jury’s determination that the chiefs acted with malice was not against the great weight of the evidence, so the lower court did not err in allowing punitive damages. The appeals court also found that the amount of punitive damages was not grossly excessive, considering that “intentional discrimination on the basis of race or ethnicity is especially reprehensible.”

Vacated judgment against deceased chief. The final issue was whether the verdict against one of the police chiefs was valid even though he died before trial. It was undisputed the parties knew of his passing, as indicated in a final pre-trial order, but neither party filed a motion to substitute the chief’s estate as a defendant. The appeals court vacated the judgment against that chief and remanded for the district court to grant leave for the officers to substitute the estate under Rule 25(a).

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